KARACHI: A custom appellate bench of High Court of Sindh (SHC) comprising Justice Muhammad Junaid Ghaffar and Justice Adnan-ul-Karim dismissed a Special Custom Reference Application filed by The Collector of Customs, Enforcement, Karachi through Pervez A. Memon, Advocate. M/S Taj Gasoline Pvt. Ltd. & another were respondents in the  SCRA through Mr. Shoukat Hayat, Advocate.

The main ground taken in the SCRA was that the learned Customs Appellate Tribunal Karachi has failed to appreciate the lab report of SGS which clearly speaks that the standard specification of seized goods do not match with the lab report of M/s. Taj Gasoline Pvt. Ltd, indicating that the seized goods are not the same whose ownership has been claimed by the respondent and that the seized goods fall under the ambit of section 2(s) of the Customs Act, 1969

The second question was that invocation of inappropriate sections of the Customs Act, 1969 in the memorandum of seizure report vitiates the offence committed by the respondent .

The SHC bench after hearing the parties and perusing  the record noted that seizure report dated 20.12.2022 generated by Pakistan Coast Guards, goods in question i.e. tanker along with petrol was seized and a show cause notice was issued on 06.01.2023, whereby, it was alleged that the petrol is of Iran Origin; hence, smuggled, entailing action under Section 2(s) of the Customs Act, 1969, along with various other provisions of law.

The  Respondents contested the allegations contained in the show cause and thereafter Order-in-Original was passed on 03.02.2023, whereby the petrol along with the Truck were ordered to be confiscated outrightly and a personal penalty was also imposed upon various persons. Being aggrieved respondents approached the Customs Appellate Tribunal and by means of the impugned judgment Order-in-Original has been set aside with further directions to release the seized petrol along with vehicle to the lawful owner.

The tribunal earlier arrived at the conclusion that Adjudication Officer while passing the impugned order-in-original has lost sight of material facts that comparative analysis report of Taj Gasoline Pvt Ltd and M/s Cnergyico PK limited oil refining business report dated 15.12.2022. It is pertinent to mention here that in the lab report of SGS there is nowhere mentioned that the impugned petrol is of Iranian origin except saying it as out of specification.

The SHC bench noted that from perusal of the aforesaid finding of Tribunal it clearly reflects that a finding of fact has been recorded which is primarily based upon documentary evidence submitted by the private Respondent and the chain of events so narrated including the loading of oil in question from the local refinery, and thereafter, issuance of delivery order in favour of private Respondent by the said refinery. Though an allegation of smuggling under section 2(s) of the Customs Act, 1969 has been alleged in the show cause notice; however, in our considered view, a finding of fact has been arrived at by the Tribunal being based on examination of documentary evidence, Lab Report of SGS conducted by PCG dated 10.01.2023 Out of Specification Analysis Report M/s Taj Gasoline Pvt limited

The bench further held that the specifications & the test reports of SGS and M/s Cnergyico Pk limited are almost identical and the reason of some plastic bottles for sampling for SGS 4 in favor of private Respondent that the petrol in question is not a smuggled item which cannot be interfered by us in our Reference Jurisdiction as per settled law, the highest authority for factual determination in tax matters is the Tribunal.

The bench note that when confronted, learned Counsel for the Applicant has argued that a laboratory test was carried out, which states that the specification of petrol is not of Pakistani standard and therefore the presumption would be that it is smuggled. However, the said argument does not appear to be convincing inasmuch as once the private Respondent had contended that the petrol in question was purchased from a local refinery, then initial burden was discharged and it was upon the applicant department to prove it otherwise. At least a query ought to have been made from the said refinery that as to whether the petrol in question was supplied by them or not. In fact, in the very seizure report, before any test could be carried out it was stated that the petrol in question is of Iran origin. This was recorded without any test; hence, the argument of the Applicants Counsel that laboratory test has proved the oil to of Iran origin, otherwise goes against the very stance of the Applicant.

The bench held that it do not find any reason to interfere with the finding of fact recorded by the Tribunal and thus  Reference Applications are hereby dismissed.